Every transaction requires a corresponding debit and credit entry. System ensures total debits equal total credits in general ledger. Transactions affect at least two accounts with equal debits and credits. System helps detect financial errors and fraud
Three main financial statements are income statement, balance sheet, and cash flow statement. Income statement shows profitability under accrual accounting rules. Balance sheet displays assets, liabilities, and equity at specific point in time. Cash flow statement shows cash movements from operating, investing, and financing activities
Going concern assumption assumes enterprise will continue operating long enough. Notes to financial statements provide information about financial position. Net income equals revenues minus expenses and dividends
Paid-in capital represents total cash received for company stock issues. Appears in shareholders' equity section of balance sheet. Includes par value plus amounts paid in excess of par
Benchmarks are standards used to measure asset value changes over time. They serve as reference points for evaluating securities and portfolios. Every investment instrument has a benchmark to compare to
CapEx are major, long-term purchases for physical assets like buildings and equipment. OpEx are day-to-day expenses like salaries, rent, and utilities. CapEx benefits company for more than one year, OpEx for one year or less. CapEx cannot be tax-deductible, OpEx can be